According to the Times of Israel, mediators say they are close to a breakthrough ahead of a Netanyahu-Trump meeting that could revive a memorandum of understanding signed between the U.S. and Iran last month.

Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute, expects the Fed to hold rates steady, saying June's moderation in inflation gives policymakers cover to extend the pause and wait for more data. Luis Alvarado, co-head of global fixed income strategy, said Waller has made clear restoring inflation to 2% remains the Fed's top priority and that policymakers have near-zero tolerance for a rebound; Alvarado added Waller appears to believe the Fed can deliver. He warned the main market impact will be in communication—particularly forward guidance—so investors should expect greater policy flexibility and larger market moves between meetings, with the ability to act flexibly on incoming data remaining critical for Waller.

The Fed will announce its July rate decision at 02:00, with the chair's press conference at 02:30. Markets put roughly a 30% chance on a hike versus 70% on a hold and are pricing a modest bias toward tightening. Pricing implies the possibility of one-to-three dissents in favor of a hike, and the chair is expected to strongly reiterate a zero-tolerance stance on inflation overshoots. Elevated US–Iran tensions are cited as upside inflation risk, while the Fed's reduced forward guidance increases uncertainty around the path of policy.